Why are builders moving away from Quickbooks?
The home building business is very competitive so successful home builders are turning away from Quickbooks to home builder specific accounting software to:
- Control Costs,
- Manage Cash Flow and
- Provide More Accurate Financial Reporting
Job costing is an important aspect of controlling cost but without budgets you have no control.
Successful home builders are investing in job cost accounting software that tracks actual to budgeted cost by category of work. They also understand budgets change during construction so it’s important that these budgets are updated in their system.
A good job cost accounting system will track the actual cost to the original budget, change order and revised budget. They will provide over budget warnings at the time of entering vendor invoices, which will also control costs up front rather than after the fact.
Managing Cash Flow
Managing cash flow is another important aspect of running any business. For home builders, the best way to manage cash flow is to make sure your client payments and or bank draws are more than what you pay your vendors for that same period. You should also get paid for change orders up front too.
A home builder specific accounting system will help you manage the cash flow by tracking draws and accounts receivable & payable by job. They will also generate and track client change orders along with generate billings for those changes. They will also allow you to select vendor invoices to pay by job so when you get paid you can easily generate vendor payments.
Generating more Accurate Financial Reports
Creating balance sheets and profit & loss statements is a great way to manage any business.
Most home builders are required to keep their records on the “Completed Contract” method of accounting for tax purposes. This means they can only report income and expenses on jobs when jobs are completed and/or closed. This is where builders need a system to generate work-in-process reports. Basically, what a work-in-process report provides is a list of “Open” jobs showing their “projected” profit & loss. Unfortunately, without up-to-date contract amounts and revised budget amounts, projected profit & loss reports would be inaccurate.
Contractors Software Group offers three series of job cost accounting systems for home builders based upon size, needs and budgets. They all help control cost overruns, improve cash flow and generate more accurate financial and work-n process reporting to run a successful building company.
For more information on Contractors Software Group’s job cost accounting software go to: https://contractorssoftwaregroup.com/construction-software-solutions/job-cost-accounting-software/
You’ll be glad you did!